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GUATEMALA: Taxes on dividends and other changes in corporate taxation

Thursday, June 21, 2012

In terms of immediate impact, a major reform of Guatemalan tax rules of is the 5% tax on dividends declared by corporations, as of January 1, 2013, as per a decree, published on March 5.

Other changes will affect transfer pricing for cross border transactions, and the introduction of the concept of permanent establishment and weak capitalization.

The initiative originally considered taxing income, which Guatemalan residents earn both inside and outside the country. However, this was not approved, so that the system of income tax remains territorial, taxing only income earned in Guatemala.

The decree defines a Guatemalan resident, as anyone who has remained in the country for 183 days a year, not necessarily consecutive.

The reforms also propose reducing the rate applicable to the general system on profits, which in 2013 will remain at 31%, but which in 2014 falls to 28% and in 2015 to 25%.

The applicable rate for the optional simplified system will be 6% on gross income less exemptions in 2013, and as of 2014 will vary progressively between 5% and 7%.

For more information, please contact Alfredo Rodriguez at [email protected] or (502) 2279-3939